SUFFOLK, Va., July 23, 2009 (GLOBE NEWSWIRE) -- Hampton Roads based TowneBank (Nasdaq:TOWN) reported net income of $6.33 million for the quarter ended June 30, 2009 representing a 4.73% increase over the second quarter results in 2008.
Net income available to common shareholders was $3.98 million after accretion and preferred dividend payments of $2.35 million on the Bank's new preferred equity issued during the third and fourth quarters of 2008. Accordingly fully diluted earnings per common share were reduced to $0.16 per share as compared to $0.24 for the prior year. The Bank's common dividend remained at $0.08 per share with the common dividend payout totaling $2.02 million.
For the second quarter, net interest income was $24.04 million, an increase of 10.97% over last year. The increase in net interest income was driven primarily by loan growth of $408.95 million, representing a 19.74% increase over last year. The Bank's net interest margin was 3.12% as compared to 3.65% for the same period last year. On a linked quarter basis, the Bank's margin increased from 2.98% in the first quarter.
Noninterest income increased 43.00% to $16.00 million. This significant growth can be partially attributed to the rise in residential mortgage brokerage income, which increased $1.85 million or 128.96% from the comparative period in 2008. Real estate brokerage and property management revenue increased 44.11% to $3.23 million due largely to the formation of Prudential Towne Realty in the first quarter of 2009. Second quarter income also included a gain of $2.38 million on the sale of available-for-sale securities as a result of management's strategy to shorten duration in the investment portfolio.
Noninterest expense increased $6.20 million or 27.75%. During the quarter the Bank recorded a $1.57 million special assessment expense as the FDIC imposed an additional insurance premium on the banking industry to replenish the deposit insurance fund.
Balance Sheet
Total Bank assets grew to a record level of $3.49 billion, an increase of $776.35 million over second quarter 2008. Towne has continued to meet the credit needs of the community with total loans reaching $2.48 billion, an increase of 19.74%. Total deposits climbed to $2.60 billion, representing a 30.93% increase over the comparable period of 2008. Importantly, the Bank's risk-based and tangible capital ratios remain well above regulatory standards for well-capitalized banks.
Asset Quality
The Bank's loan portfolio continues to perform well compared to the overall banking industry. Non-performing assets at June 30, 2009 were $23.67 million or 0.68% of total assets, up from a very low 0.08% last year. Net losses for the quarter were $2.28 million or 0.37% of average loans. The loan loss provision which increased in part due to loan growth was $2.72 million as compared to $2.07 million for the last year. The Bank's loan loss reserve ended the quarter at 1.17%, up slightly from 1.16% for the comparable period last year.
"We were pleased with our continued growth in earnings in the current challenging business environment. We are blessed with having the best bankers in town and because of their performance and a combination of a thriving mortgage refinance business, good investment portfolio strategies, and balance sheet growth, we were able to sustain our growth in earnings," stated G. Robert Aston, Jr., Chairman and CEO.
As one of Virginia's top community banks, TowneBank now operates 17 banking offices in Chesapeake, Hampton, Portsmouth, Newport News, Virginia Beach, Norfolk, Williamsburg and York County. Towne also offers a full range of financial services through its controlled divisions and subsidiaries that include Towne Investment Group, Towne Insurance Agency, TFA Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Prudential Towne Realty, Towne 1031 Exchange, LLC, Corolla Classic Vacations and Corolla Real Estate. Through its strategic partnership with William E. Wood and Associates, the bank also offers mortgage services in all of their offices in Hampton Roads and Northeastern North Carolina. Local decision-making is a hallmark of its hometown banking strategy that is delivered through the leadership of each group's President and Board of Directors. With total assets of $3.49 billion as of June 30, 2009, TowneBank is one of the largest banks headquartered in Virginia.
Forward-Looking Statements:
This release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements may address issues that involve significant risks, uncertainties, estimates and assumptions made by management. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include competitive pressures in the banking industry that may increase significantly; changes in the interest rate environment may reduce margins and/or the volumes and values of loans made or held as well as the value of other financial assets held; general economic conditions, either nationally or regionally, may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit or other services; changes in the legislative or regulatory environment, including changes in accounting standards, may adversely affect our business; costs or difficulties; related to the integration of the business and the businesses we have acquired may be greater than expected; expected cost savings associated with pending or recently completed acquisitions may not be fully realized or realized within the expected time frame; our competitors may have greater financial resources and develop products that enable them to compete more successfully; changes in business conditions, changes in the securities market and changes in our local economy with regards to our market area and its heavy concentration of U.S. military bases and related personnel. We assume no obligation to update information contained in this release.
Selected Financial Highlights (unaudited)
TOWNEBANK
June 30, 2009
(dollars in thousands)
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Three Months Ended Increase/ % Increase/
June 30, 2009 2008 (Decrease) (Decrease)
---------- ---------- ---------- ---------
Results of Operations:
Net interest income $ 24,039 $ 21,662 $ 2,377 10.97%
Noninterest income 15,996 11,186 4,810 43.00%
Noninterest expenses 28,552 22,350 6,202 27.75%
Provision for loan
losses 2,720 2,068 652 31.53%
Pretax Income 8,666 8,401 265 3.15%
Provision for income
tax expense 2,339 2,360 (21) (0.89%)
Net income 6,327 6,041 286 4.73%
Preferred stock
dividends and
accretion 2,346 -- 2,346 N/M
Net income available
to common
shareholders 3,981 6,041 (2,060) (34.10%)
Net income per common
share - basic 0.16 0.25 (0.09) (36.00%)
Net income per common
share - diluted 0.16 0.24 (0.08) (33.33%)
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Period End Data:
Total assets $3,492,374 $2,716,028 $ 776,346 28.58%
Total assets -
tangible 3,409,282 2,643,199 766,083 28.98%
Earning assets 3,191,927 2,452,237 739,690 30.16%
Loans (net of unearned
income) 2,480,199 2,071,251 408,948 19.74%
Allowance for loan
losses 29,012 23,929 5,083 21.24%
Goodwill and other
intangibles 83,092 72,829 10,263 14.09%
Noninterest bearing
deposits 585,396 526,157 59,239 11.26%
Interest bearing
deposits 2,010,720 1,456,709 554,011 38.03%
Total deposits 2,596,116 1,982,866 613,250 30.93%
Total equity 429,118 263,991 165,127 62.55%
Total equity -
tangible 346,025 191,162 154,863 81.01%
Common equity 297,724 263,991 33,733 12.78%
Common equity -
tangible 214,632 191,162 23,470 12.28%
Book value per common
share 11.91 10.87 1.04 9.57%
Book value per common
share - tangible 8.59 7.87 0.72 9.15%
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Daily Average Balances:
Total assets $3,366,733 $2,649,180 $ 717,553 27.09%
Total assets -
tangible 3,283,244 2,576,101 707,143 27.45%
Earning assets 3,085,633 2,390,103 695,530 29.10%
Loans (net of unearned
income), excluding
nonaccrual loans 2,426,944 1,976,214 450,730 22.81%
Allowance for loan
losses 28,909 22,843 6,066 26.56%
Noninterest bearing
deposits 552,618 482,975 69,643 14.42%
Interest bearing
deposits 1,918,884 1,455,351 463,533 31.85%
Total deposits 2,471,502 1,938,325 533,177 27.51%
Total equity 430,304 265,927 164,377 61.81%
Total equity -
tangible 346,816 192,847 153,969 79.84%
Common equity 298,819 265,927 32,892 12.37%
Common equity -
tangible 215,331 192,847 22,484 11.66%
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Key Ratios:
Return on average
assets 0.75% 0.92% (0.17%) (18.48%)
Return on average
assets - tangible 0.77% 0.94% (0.17%) (18.09%)
Return on average
equity 5.90% 9.14% (3.24%) (35.45%)
Return on average
equity - tangible 7.32% 12.60% (5.28%) (41.90%)
Return on common
equity 5.34% 9.14% (3.80%) (41.58%)
Return on common
equity - tangible 7.41% 12.60% (5.19%) (41.19%)
Net interest margin 3.12% 3.65% (0.53%) (14.52%)
Average earning assets
/total average assets 91.65% 90.22% 1.43% 1.59%
Average loans/average
deposits 98.20% 101.95% (3.75%) (3.68%)
Average noninterest
deposits/total
average deposits 22.36% 24.92% (2.56%) (10.27%)
Allowance for loan
losses/period end
loans 1.17% 1.16% 0.01% 0.86%
Nonperforming assets
to period end assets 0.68% 0.08% 0.60% 750.00%
Period end equity/
period end total
assets 12.29% 9.72% 2.57% 26.44%
Efficiency ratio 71.32% 68.04% 3.28% 4.82%
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Selected Financial Highlights (unaudited)
TOWNEBANK
June 30, 2009
(dollars in thousands)
=====================================================================
Six Months Ended Increase/% Increase/
June 30, 2009 2008 (Decrease) (Decrease)
---------- ---------- ---------- --------
Results of Operations:
Net interest income $ 45,889 $ 41,888 $ 4,001 9.55%
Noninterest income 32,310 22,946 9,364 40.81%
Noninterest expenses 55,812 44,902 10,910 24.30%
Provision for loan
losses 4,690 2,963 1,727 58.29%
Pretax Income 17,936 16,930 1,006 5.94%
Provision for income
tax expense 5,007 4,896 111 2.27%
Net income 12,929 12,034 895 7.44%
Preferred stock
dividends and
accretion 5,362 -- 5,362 N/M
Net income available
to common shareholders 7,567 12,034 (4,467) (37.12%)
Net income per common
share - basic 0.31 0.50 (0.19) (38.00%)
Net income per common
share - diluted 0.30 0.47 (0.17) (36.17%)
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Period End Data:
Total assets $3,492,374 $2,716,028 $ 776,346 28.58%
Total assets - tangible 3,409,282 2,643,199 766,083 28.98%
Earning assets 3,191,927 2,452,237 739,690 30.16%
Loans (net of unearned
income) 2,480,199 2,071,251 408,948 19.74%
Allowance for loan
losses 29,012 23,929 5,083 21.24%
Noninterest bearing
deposits 585,396 526,157 59,239 11.26%
Interest bearing
deposits 2,010,720 1,456,709 554,011 38.03%
Total deposits 2,596,116 1,982,866 613,250 30.93%
Total equity 429,118 263,991 165,127 62.55%
Total equity - tangible 346,025 191,162 154,863 81.01%
Common equity 297,724 263,991 33,733 12.78%
Common equity -
tangible 214,632 191,162 23,470 12.28%
Book value per share 11.91 10.87 1.04 9.57%
Book value per share -
tangible 8.59 7.87 0.72 9.15%
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Daily Average Balances:
Total assets $3,291,906 $2,605,595 $ 686,311 26.34%
Total assets - tangible 3,211,644 2,533,268 678,376 26.78%
Earning assets 3,030,528 2,349,321 681,207 29.00%
Loans (net of unearned
income), excluding
nonaccrual loans 2,401,740 1,918,729 483,011 25.17%
Allowance for loan
losses 28,204 22,241 5,963 26.81%
Noninterest bearing
deposits 523,329 464,840 58,489 12.58%
Interest bearing
deposits 1,875,243 1,441,203 434,040 30.12%
Total deposits 2,398,572 1,906,043 492,529 25.84%
Total equity 426,212 263,610 162,602 61.68%
Total equity - tangible 345,950 191,282 154,668 80.86%
Common equity 294,785 263,610 31,175 11.83%
Common equity -
tangible 214,523 191,282 23,241 12.15%
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Key Ratios:
Return on average
assets 0.79% 0.93% (0.14%) (15.05%)
Return on average
assets - tangible 0.81% 0.96% (0.15%) (15.63%)
Return on average
equity 6.12% 9.18% (3.06%) (33.37%)
Return on average
equity - tangible 7.54% 12.65% (5.12%) (40.40%)
Return on common equity 5.18% 9.18% (4.00%) (43.58%)
Return on common equity
- tangible 7.11% 12.65% (5.54%) (43.79%)
Net interest margin 3.05% 3.59% (0.54%) (15.04%)
Average earning assets/
total average assets 92.06% 90.16% 1.90% 2.11%
Average loans/average
deposits 100.13% 100.67% (0.54%) (0.54%)
Average noninterest
deposits/total average
deposits 21.82% 24.39% (2.57%) (10.54%)
Allowance for loan
losses/period end
loans 1.17% 1.16% 0.01% 0.86%
Nonperforming assets to
period end assets 0.68% 0.08% 0.60% 750.00%
Period end shareholders'
equity/period end
total assets 12.29% 9.72% 2.57% 26.44%
Efficiency ratio 71.37% 69.26% 2.11% 3.05%
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